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                                                                                                                 Monthly Update of Economic,
                                                                                                                 Banking and Financial News

Vol. 03, Issue 08               An Endeavor to Transtate
                                Market Insight into Business
August 2011                     Need.

                                                      A Newsletter of Research & Development Division, Prime Bank Limited
                                                                               insurance policy, both prices and premiums tumbled after online price-
ARTICLE                                                                        comparison sites became popular. Price, indeed, is the predominant
                                                                               concern for the overwhelming majority of consumers buying insurance
Reinventing a business at risk                                                 products in the United Kingdom, Europe's biggest insurance market.
By Eric Veron, Khalid Lahoraoui and Laurent Floquet
                                                                               Confronted with similar pricing pressures, French insurers will have little
If the situation in France is any indication, the party's over for the         option but to offer minimum coverage at low cost, and they will still
European insurance industry.                                                   struggle to maintain satisfactory margins. In fact, ROE could fall into the
                                                                               red for non-life players and struggle to climb above 1% in the life sector-
Recent Accenture research in Europe's second-biggest insurance market          unless the industry moves to a low-cost business model.
shows that after 10 years of double-digit returns on equity and annual
growth rates three times higher than GDP, a combination of powerful            For most, that will mean major restructuring. We estimate that in order to
regulatory, demographic and competitive forces will make the next decade       survive a price war, an insurer will need to slash 20% to 30% from its
considerably tougher for France's big insurers.                                administrative costs and as much as 40% to 50% from the cost of
                                                                               acquiring each customer or policy.
A sluggish economy and anemic population growth are already leading to
saturation in some sections of the Gallic insurance market-notably in          Some insurers are starting to make moves in this direction, relocating or
property/casualty but also in health and in personal accident and              pooling their back offices and investing in digital technologies that
sickness. The life sector, meanwhile, which faces the likely loss of           facilitate direct selling. French insurance giant AXA, for example, which is
government tax incentives, is battling to maintain rapidly dwindling fee       a major global player, has been offshoring part of its contract
income in the face of mounting competition from new, pure-play providers       management for its French health insurance and savings products in
whose online business models allow them to offer innovative products at        Morocco.
significantly lower cost.
                                                                               Covéa and SFEREN, meanwhile, are mutual insurance groupings that
Indeed, as French consumers become increasingly value-conscious and            operate under French law as a type of joint venture and represent
Internet, for example, the French equivalent of the          attempts by some half dozen major French insurance brands to pool such
United Kingdom's popular price-comparison site, was               back-office functions as claims control and IT to enhance economies of
launched in January 2010-traditional insurers across the industry are          scale. SFEREN's three insurance brands contract jointly for postal and
finding it more and more difficult to compete.                                 computing services, for example.
How French insurers react to these challenges will offer important lessons     We estimate that by 2020, restructuring efforts like these could boost
for others striving to preserve profitability in similarly saturating mature   profitability for personal and property and casualty insurers to nearly 7%,
markets well beyond the borders of France.                                     and that life insurers could expect to post profits of almost 6%. As
                                                                               consolidation intensifies, some smaller players may well go out of
Accenture's recent study of the French insurance market set out to             business.
investigate the likely impact on market participants as macroeconomic
changes and developments in consumer behavior steadily alter the rules         Scenario B: An improving economy-but ongoing price pressure
of the game. The study involved an exhaustive statistical analysis of some     This scenario assumes that with more robust GDP grow-2.5% to 3%-
60 relevant variables and their impact on insurers' operating models and       consumers will have more to spend on insurance products-but that the
financial structure. It also included a more subjective exercise that sought   continuing, Internet-driven “industrialization” of the insurance market will
to identify potential future shifts by examining what happened to insurers     still push prices inexorably downward.
in other countries when, for example, the government withdrew from
healthcare provision.                                                          Companies that maintain their market share in these circumstances could
                                                                               expect rates of premium growth of 1.9% in the p/c sector, 4.3% for those
Four scenarios                                                                 offering personal accident and sickness, and 4.8% for life insurers. But
Our investigations enabled us to develop four predictive scenarios for the     without heavy restructuring, by 2020, they would see ROE drop to 4.5% in
industry in France, looking out to 2020.                                       the property/casualty and personal sectors, and to 5.1% in life.
These scenarios are not mutually exclusive. Indeed, they paint a picture       If, however, they were to reduce acquisition and administrative costs by
of market situations that could quite conceivably coexist-an insurer           taking steps to optimize physical networks and switch to direct distribution
implementing a low-price strategy in its property/casualty business, for       channels, ROE would almost double for the first two sectors and would
example, and a customized, high-end strategy for its life business. In         likely reach 8.1% for life insurers.
other words, the same hypothetical insurer could mix and match solutions
across scenarios. The predominance of one scenario over another, and
the impact of the transformations proposed for each scenario, will depend        Inside this Issue Editorial Body
on the individual characteristics of each insurer.
                                                                                Article                     01   Md. Golam Moula, EO
Scenario A: Price war                                                           Country Profile             02   ATM Shirajul Haque, SO
                                                                                Commodity News              03   Eiman Fergeion, SO
This scenario assumes (as a recent report for the French government has
                                                                                Corporate News              03   Imam Hossain Mahmud, MT
suggested) that GDP growth will be weak-hovering around 1.3%. French
                                                                                Global Business & Economy   04   Research & Development Division
consumers, reluctant to spend, will consider most insurance products
                                                                                Bangladesh Economy          05
commodities and favor the cheapest providers. The result: a price war                                            Prime Bank Limited
                                                                                Finance & Banking           07
similar to the one that occurred after deregulation of the French
                                                                                Energy                      08   SBC Tower (6th Floor)
supermarket sector between 2004 and 2010, when operating margins
                                                                                Agriculture                 09   37/A Dilkhusha C/A,
were halved.                                                                                                     Dhaka-1000
                                                                                Ready Made Garments         09
We believe this scenario to be the most likely for the bulk of the French       IT & Telecommunication      10   Tel: 9565564,
insurance industry. In the United Kingdom, after all, where car owners          Miscellaneous               10   PABX: 9568184, 95657594 (Ext: 221)
now obtain an average of four online quotes before taking out a new auto        Strategic Moves of FIs      10   web:
                                                       A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                          Vol. 03, Issue 08, August 2011                                2
The streamlining and standardization of IT processes will be a major             country's increasing urbanization. In 2010, the GDP was estimated at
driver of price competitiveness in this scenario-as in all the others. But so    $357.2 billion.
will the optimization of distribution networks. And we anticipate the spread
of distribution partnerships that sell bundles of insurance products, as         Agriculture: Iran's agricultural sector contributes 11% of the GDP and
some banks and retailers are starting to do. Cetelem, for example, a             employs 25% of the labour force. Wheat, rice, and barley are the
brand name of BNP Paribas Personal Finance, is packaging consumer                country's major crops. Other principal crops include potatoes, legumes
credit and home loan products and marketing them via both its own bank-          (beans and lentils), vegetables, fruits, sugar beets, sugarcane, fodder
branded credit cards and through private-label versions that feature the         plants (alfalfa and clover), nuts (pistachios, almonds, and walnuts), spices
brand names of its retail partners across Europe and beyond.                     (including cumin, sumac, and saffron), and tea. Major agricultural exports
                                                                                 include fresh and dried fruits, nuts, animal hides, processed foods, and
Scenario C: An improving economy-and increasingly discerning consumers           spices.
In this scenario-the most attractive-an economic recovery drives more            Mining:: Mineral products, notably petroleum, dominate Iran's exports,
optimistic consumers to seek personalized insurance products and                 but mining employs less than 1% of the country's labour force. Since
advisory services. Insurers would be able to differentiate themselves by         1913 Iran has been a major oil exporting country. In the late 1970s it
offering high-value, customized products and the sales skills to market          ranked as the fourth largest oil producer and the second largest oil
them effectively to secure customer loyalty. As a result, we estimate that       exporter in the world. Following the 1979 revolution, however, the
by 2020, ROE could soar to 11.6% for property/casualty and personal              government reduced daily oil production in accordance with an oil
insurers and almost as high (to 10.2%) for life companies.                       conservation policy.
First, however, insurers will need to invest heavily in distribution skills.     Although the petroleum industry provides the majority of economic
This won't necessarily be easy. When you're dealing with consumers who           revenues, about 75%of all mining sector employees work in mines
won't tolerate mistakes, there's a danger that costly and complex products       producing minerals other than oil and natural gas. These include coal,
and expensive networks of specialist salespeople will eat into operating         iron ore, copper, lead, zinc, chromium, barite, salt, gypsum, molybdenum,
margins-in which case, ROE could slump significantly in all three                strontium, silica, uranium, and gold. The mines at Sar Cheshmeh in
insurance sectors.                                                               Kerman Province contain the world's second largest lode of copper ore.
                                                                                 Large iron ore deposits lie in central Iran, near Bafq, Yazd, and Kerman.
Insurers looking to make the most of this scenario could look at examples
such as Barclays Premier UK-based bank's initiative to double its “mass          Manufacturing: Iran has a long tradition of producing artisan goods,
affluent” French customers (those with minimum assets of ¤50,000) within         including carpets, ceramics, copperware and brassware, glass, leather
two years. The bank is hiring highly experienced financial advisors to           goods, textiles, and woodwork. The country's major manufactured
provide personalized advisory services for such customers-it expects to          products are petrochemicals, steel, and copper products. Other important
have 850 of them by 2013-either via the Internet or by appointment in            manufactures include automobiles, processed foods (including refined
exclusively designed offices in mid-sized French cities where Barclays           sugar), carpets and textiles, pharmaceuticals, and cement.
does not have a traditional branch presence.
                                                                                 Forestry and Fishing: Although they contribute very little to the GDP and
Scenario D: A declining market-and consumers still demanding more                employ a small percentage of workers, fishing and logging are important
This may well be the nightmare scenario for many insurers: consumers             industries in specific regions. Logging takes place primarily in the forests
seeking competitively priced, “anywhere, anytime” products that answer           of the Elburz Mountains, where various deciduous and conifer trees are
specific needs and whose duration can be adjusted, in real time,                 harvested for construction, furniture, pulp, industrial uses, and fuel.
according to their fluctuating fortunes in a tough economy.                      Fishing fleets operate out of several ports on the Caspian Sea, the
                                                                                 Persian Gulf, and the Gulf of Oman. Caviar harvested from Caspian Sea
We believe that in such a critical situation, property/casualty and personal
                                                                                 sturgeon is an important export item. Grouper, shrimp, and tuna caught in
insurers could struggle to achieve ROE of 4.7%, and life insurers would
                                                                                 the Persian Gulf are important for the domestic and export markets.
be lucky to achieve 4.6%.
                                                                                 Various species of rock lobsters are caught in the Gulf of Oman.
If, however, insurers responded to mounting pressure by investing in on-
demand capabilities and reinventing their actuarial practices to assess          Transportation: Iran has an extensive paved road system linking most of
client risk in greater detail, they would be able to build up personalized       its towns and all of its cities. The country has 172,927 km of roads, of
policy subscriptions, in real time and across all communication channels-        which 73% are paved. Trains operate on 8442 km of railroad track. The
online, by telephone and through agencies. In that case, we estimate, the        Tehan-Bandar-e Abbas railroad, opened in 1995, connects Bandar-e
ROE outlook would improve considerably by 2020, to 7.6% for non-life             Abbas, on the Strait of Hormuz, to the railroad system of Central Asia via
insurers and 6.5% for life companies.                                            Tehran and Mashhad. Other major ports include Bandar-e Anzali and
                                                                                 Bandar-e Torkeman on the Caspian Sea and Korramshahr and Bandar-e
The recent experience of pure-play providers offers some intriguing              Khomeyni on the Persian Gulf. Dozens of cities have airports that serve
innovation options. For instance,, the online brand of
                                                                                 passenger and cargo planes. Iran Air, the national airline, which was
Groupama, France's sixth-largest insurance company, has successfully
                                                                                 founded in 1962, operates domestic and international flights. All large
launched a “pay as you drive” auto insurance product-drivers pay only
                                                                                 cities have mass transit systems using buses, and several private
when the car is actually used-that costs half as much as traditional
products. (Source: Outlook, June 2011, the Accenture)                            companies provide bus service between cities.
                                                                                 Energy: In the 1980s and 1990s, Iran built several new natural gas,
COUNTRY PROFILE                                                                  combined cycle (using both gas and steam), and hydroelectric power
                                                                                 stations, dramatically increasing electric power output. Thermal plants
Iran                                                                             supply 97% of the country's electricity, and hydroelectric facilities provide
                                                                                 most of the rest.
Area and Population: Iran, officially the Islamic Republic of Iran, is a
country in southwestern Asia, located on the eastern shore of the Persian        Foreign Trade: Petroleum dominates Iran's exports, making up 85% of
Gulf. One of the world's most mountainous countries, Iran contains Mount         export earnings. Major non-oil exports include carpets, chemicals, steel,
Damavand, the highest peak in Asia west of the Himalayas. The country's          fresh and dried fruits, nuts. The country's leading purchasers are China,
population, while ethnically and linguistically diverse, is almost entirely      India, South Korea, Turkey. Principal imports include machinery, transport
Muslim. The country has an area of 1.648 million square kilometre and a          equipment, chemicals, iron and steel, and food products. Primary
population of 77.89 million. Tehran is the country's capital and largest city.   suppliers of imports are UAE, China, Germany, South Korea, Italy and
Economy: Although historically agriculture was the most important sector         Russia.
of Iran's economy, its share of the Gross Domestic Product (GDP) has             Bangladesh-Iran Trade
been declining since the 1930s due to the rise of manufacturing.
Meanwhile, the mining sector, which is dominated by the production of oil,       Two-way trade between the countries has shown a mixed trend in recent
has grown rapidly since Iran nationalized its oil fields in the 1950s.           years. Total trade amounted to $114.24 million in 2009-10 compared to
Factory manufacturing has experienced periods of both rapid growth and           $84.92 million in 2008-09 and $94.76 million in 2007-08, showing a rise of
stagnation. Trade and commerce activities have expanded with the                 34.53% in 2009-10 but a fall of 10.38% in 2008-09.
                                                      A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                       Vol. 03, Issue 08, August 2011                                3
                Position of Bilateral Iran (US $ million)                     presence of members of the monitoring team for a short while and
                                                                              stopped selling as soon as the team left. Sugar was selling at Tk 70 per kg
  Year         Total trade      Exports to Iran        Imports from Iran      in some retail shops at Reazuddin Bazar and Boxirhat while some shops
 2009-10 1       14.24             77.44                   36.80              in the same markets sold sugar at Tk 72. (Source: The Financial Express,
                                                                              04 August 2011)
 2008-09 8         4.92             46.51                   38.41
 2007-08         94.76              55.29                   39.47             Rains push up vegetables prices
                                                                              The heavy downpour across the country has disrupted smooth
As can be seen in the table above, Bangladesh's exports to Iran have          transportation of vegetables and other goods to the capital that had forced
shown a mixed trend in recent years. Exports amounted to $77.44 million       the traders to hike prices. The prices of tomato, brinjal, papaya, lady's
in 2009-10 compared to $46.51 million in 2008-09 and $55.29 million in        finger and green chili have increased by Tk 10 to Tk 15 per kg. Per kg of
2007-08, showing a rise of 66.50% in 2009-10 but a fall of 15.88% in          coriander leaves, an important spice for preparing Iftar items, was selling
2008-09.                                                                      at Tk 380 to Tk 400 per kg. The market price showed that per kg of
              Major items Exported to Iran (US $ million)                     papaya was selling between Tk 20 and Tk 25 which was Tk 15 on the first
                                                                              day of Ramadan; green chili was selling at Tk 80 per kg and lady's finger
 Major export items              2007-08          2008-09        2009-10      was selling at Tk 45 to Tk 48.(Source: The Financial Express, 11 August
 Jute goods                        43.13            32.15          74.15
 Raw jute                           0.24             1.90           1.12      Onion, vegetables up as traders ignore official chart
 Woven garments                     0.03             0.13           0.26      Prices of onion and vegetables witnessed a fresh hike while those of other
 Knitwear                           0.02             0.12           0.13      things maintained the earlier high trend in the city's kitchen markets. In
 Agricultural products                 -             0.17           0.08      addition, the price charts prepared by Dhaka City Corporation and Trading
                                                                              Corporation of Bangladesh do not match with the retail prices of
 Chemical products                  0.14               -               -
                                                                              essentials. Prices of essentials also vary from markets to markets. Prices
 Others                            11.73            12.04           1.70      of other commodities like rice and edible oil remained more or less
 Total                             55.29            46.51          77.44      maintained the earlier week's trend. But prices of vegetables increased a
Source: Export Promotion Bureau                                               hike by Tk 10-15 per kg, especially the green chili. Prices of vegetables,
                                                                              especially green chili, potato, tomato, cucumber, okra and brinjal
Bangladesh's imports from Iran have shown a falling trend in recent years.    witnessed a high trend during the Ramadan. (Source: The Financial
Imports amounted to $36.80 million in 2009-10 compared to $38.41 million      Express, 20 August 2011)
in 2008-09 and $39.47 million in 2007-08, showing a fall of 4.19% in 2009-
10 and 2.69% in 2008-09.                                                      Prices of almost all essentials mark rise
                                                                              Prices of almost all essentials especially vegetables, spices, poultry birds
             Major items Imported from Iran (US $ million)
                                                                              and other items having growing demand witnessed fresh hike in the
                                                                              kitchen markets just ahead of the biggest religious festival of Muslims Eid-
  Major import items                        2007-08    2008-09 2009-10
                                                                              ul-Fitr.There are no vegetables except potato and papay that are traded
  Iron and steel                              0.04       1.38   16.92         below Tk 50 per kg and almost all varieties witnessed a hike by Tk 10-20
  Mineral fuels                               1.90       8.31    9.18         per kg compared to that of last week, visit to different kitchen markets
  Cotton                                      5.55       4.88    4.31         revealed Green chili ranged from Tk 180 to 250 per kg, tomato at Tk 80-
  Plastic and articles thereof                0.24       2.40    2.98         100 per kg, okra at Tk 60-80 per kg, brinjal at Tk 80-100 per kg and
                                                                              cucumber at Tk 50-80 per kg. Potato was selling at Tk 16-18 per kg and
  Lime and cement                             2.29      19.78    1.42
                                                                              papaya at Tk 30-35 per kg. Other vegetables like crescent gourd, arum
  Machinery and mechanical appliances        0.02         -      0.55         root, snake gourd and ridge gourd were selling at Tk 45 to Tk 55 per kg in
  Tanning or dyeing extracts                  0.17       0.24    0.21         different markets of the city. Local onion was selling at Tk 42-48 per kg
  Organic chemicals                           0.38       0.42    0.19         and the Indian variety at TK 33-35 per kg, in the city's different kitchen
  Medical or surgical instruments             0.03       1.00    0.18         markets last week.(Source: The Financial Express, 27 August 2011)
  Others                                     30.85      18.80    0.86
  Total                                      39.47      38.41   36.80         CORPORATE NEWS
Source: Bangladesh Bank                                                       Honda to build new plant in Mexico
                                                                              Japan's Honda Motor will build a new plant in Mexico to produce cars for
COMMODITY NEWS                                                                the North American market to improve its profitability against a stronger
                                                                              yen and tariffs. Construction on the plant may start next year near Honda's
Sugar crisis again                                                            existing factory in Jalisco, Mexico. The new facility is due to begin
A number of retailers of Karwan Bazar kitchen market in the capital           operations in 2014.Honda plans to spend about 20 billion yen ($260
complained to a parliamentary body that dealers are not supplying them        million) on the investment, with the plant's initial production capacity
sugar for sale. However, the delegation of the parliamentary body on          expected to be 100,000 vehicles a year. The plant will produce such
commerce ministry observed that it's "nothing unusual" and assured them       vehicles as a next-generation model of the popular compact Fit. Honda
of sugar supply soon. The price was much higher than the government-          currently ships Fit compacts to the United States from a plant in Japan
fixed price of Tk 63-65 per kg.The delegates are "quite satisfied" with the   and sells about 60,000 units a year there. (Source: AFP, 01 August 2011)
prices of essentials as sugar, gram and oil are "available" in the markets
and are selling at "normal" prices. The sellers were seen replying promptly   Ford wagers on Asia to drive global growth
in the positive. Many wholesalers at the two big wholesale points of the      Ford Motor Co was slow out of the starting gate in Asia but now the
city markets were found selling sugar at Tk 72-73 per kg.(Source: The         number two US automaker is betting big on the region to drive global
Daily Star, 03 August 2011)                                                   growth. Ford has just announced plans to spend $1 billion to build a
Wholesalers sell sugar at fixed price before monitoring team                  second car and engine complex in India as it ramps up production to
                                                                              exploit the country's fast-growing vehicle market, bringing to seven the
The district administration's market monitoring team visited the
                                                                              number of plants it is building in Asia. Rising incomes and rapidly
Khatungonj wholesale market to make an on-the-spot investigation of
sugar sales. Executive magistrate of the District Commissioner office in      expanding young populations have turned Asia into a battleground for
Chittagong led the monitoring team that visited the wholesalers and           global car manufacturers such as Ford, GM and Toyota, which hope to
retailers of sugar. The government has fixed Tk 63 for a kg of sugar in the   grow revenues by steering towards the Asia-Pacific region and Africa.
wholesale and Tk 65 in the retail shops during the month of Ramadan.          Ford is just a minnow with only 3% of the markets in China and India -- the
Retailers alleged wholesalers sold sugar at the government rate in            two fastest-growing globally.(Source: AFP, 01 August 2011)
                                                        A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                            Vol. 03, Issue 08, August 2011                                 4
HSBC pre-tax profit up 3.3%                                                       Global acclaim for Citigroup
HSBC made a profit before tax of US$11,474m, an increase of US$370m,              Citigroup Asia Pacific was named the “World's Best Internet Bank” in 13
or 3.3%, compared with the first half of 2010.Profit attributable to ordinary     markets across Asia Pacific by Global Finance magazine.Citigroup was
shareholders was US$8,929m, an increase of US$2,300m or 35%                       named “Best Corporate/Institutional Internet Banks” in 11 countries,
compared with the first half of 2010.Net interest income of US$20,235m            including Australia, Bangladesh, China, India, Indonesia, Japan, Korea,
was US$478m, or 2.4%, higher than the first half of 2010.HSBC's cost              New Zealand, Philippines, Taiwan and Thailand. It was also named “Best
efficiency ratio was 57.5% compared with 50.9% in the first half of 2010.         Consumer Internet Banks” in nine countries, including Australia, China,
Loan impairment charges and other credit risk provisions were                     Guam, India, Indonesia, Japan, Korea, Thailand and Vietnam. Winning
US$5,266m in the first half of 2011, US$2,257m lower than the first half of       banks were selected based on the strength of their strategy in attracting
2010.(Source: Hawker, 02 August 2011)                                             and servicing online customers, success in getting them to use web
                                                                                  offerings, the growth of online customers, breadth of product offerings,
Japan's Mitsubishi Motors returns to black                                        and web site design and functionality. (Source: The Daily Star, 04 August
Japanese automaker Mitsubishi Motors returned to profit for the three             2011)
months to June and upgraded its interim forecast, weathering the impact
of the March 11 quake and tsunami. The maker of the i-MiEV electric car           Unilever profit rises 10% on emerging market sales
reported a net profit of 4.3 billion yen ($55 million) for the April-June         Anglo-Dutch food and cosmetics giant Unilever said its first half net profit
quarter, reversing a net loss of 11.8 billion yen in the same period last         rose 10 % on the back of rising sales in emerging markets such as China
year. Operating profit came to 12.2 billion yen, compared with the                and India.Net profit came in at 2.24 billion euro ($3.17 billion), topped
operating loss of 4.5 billion yen a year earlier, while sales gained 7.0 % to     analyst forecasts compiled Dow Jones Newswires for $1.88
431.9 billion yen. It cited strong sales in the United States, thanks to the      billion.Unilever, which sells popular brands ranging from Lipton tea, Knorr
successful launch of its multi-purpose Outlander Sport vehicle in October         soups, Magnum ice creams to Dove beauty care and Sunlight
2010 and in Russia where demand has picked up. Sales also accelerated             dishwashing liquid, said first half sales rose 5.7% to 22.79 billion
in countries such as Thailand, Indonesia and Brazil. (Source: AFP, 02             euros.Sales in Asia were strong despite the impact of the Japanese
August 2011)                                                                      earthquake, with a similar performance in Africa in the Middle East, where
                                                                                  popular unrest has caused some uncertainty. (Source: AFP, 05 August
HSBC to axe 30,000 jobs after bumper profits                                      2011)
HSBC will slash 30,000 jobs worldwide over the next two years as part of
a major cost-cutting drive aimed at refocusing on Asia. Europe's biggest          Air Asia share deal to help Malaysia Airlines
lender was cutting 5,000 workers in Latin America, the United States,             Southeast Asia's largest budget airline Air Asia looks set for a major share
Britain, France and the Middle East, but new boss Stuart Gulliver revealed        swap with Malaysian Airlines in a deal to help save the struggling national
that the cost-cutting plans would go deeper. The job cuts are part of the         flag carrier. The agreement could see Malaysia-based Air Asia's owner
group's already-announced plans to slash costs by up to $3.5 billion (2.4         gain 20% of the equity in its loss-making rival. (Source: The Daily Star, 08
billion euros) within two years. The British lender meanwhile, which              August 2011)
survived the 2008 crisis without state aid unlike many of its rivals,
announced in a strategic review earlier this year plans to save $2.5-3.5
billion in costs by 2013.(Source: The Daily Star, 02 August 2011)                  GLOBAL BUSINESS & ECONOMY
HSBC to hire 15,000 in emerging markets                                           Competition easing in Indian mobile market
Global banking giant HSBC would hire thousands of people in emerging              With more than 850 million mobile phone connections, India is the world's
markets by 2014 as it looked particularly to Asia's booming financial sector      second-biggest telecoms services market after China and is still adding
to power future growth. More than a third of HSBC's current workforce of          subscribers at the fastest pace. Carriers operate under wafer-thin margins
300,000 is already in Asia. Asia contributed 59% of the group's pre-tax           in the 15-player market and a vicious price war in second half of 2009
profits in the first six months of 2011, up 16% from the same period last         after new licences were given out has strained their financials. Burdened
year, while net fee income grew 17% in the region year-on-year. The bank          by declining margins and high costs of radio airwaves, Bharti and its
also unveiled plans to sell 195 retail branches, primarily in upstate New         smaller rivals Vodafone Essar and Idea Cellular recently increased some
York, to First Niagara Bank for an estimated $1 billion. (Source: AFP, 03         call prices in select zones in what was the first such increase by the
August 2011)                                                                      established firms in at least two years. The long-awaited market
                                                                                  consolidation will help improve the landscape for the big carriers, but rules
Toyota lifts forecasts, posts Q1 loss                                             are not encouraging. (Source: Reuters, 02 August 2011)
Toyota Motor Corp reported its first quarterly loss in two years as Japan's       China to explore Indian Ocean seabed
biggest earthquake hammered production and a strong yen hit export
                                                                                  China has won the right to explore for minerals in part of the Indian Ocean
profits, and the company raised its profit forecast on a speedy recovery.
                                                                                  as the energy-hungry country scours the world for resources to fuel its
The supply constraints from the March 11 earthquake have eased faster             fast-growing economy. The International Seabed Authority has approved
than initially feared and Toyota said unrestricted production would return in     China's application to look for polymetallic sulphides -- rich in copper, iron,
September, about two months ahead of a previous forecast. But the                 lead, zinc, gold and silver -- in the Southwest Indian Ocean Ridge. China
dollar's drop is set to further eat into profits as Toyota exports more than      is the first country to win such approval in the area that divides the ocean
half of its vehicles produced in Japan, and an executive warned that              between Africa and Antarctica. China will be allowed to explore an area
Toyota's domestic operations would struggle to claw out of the red at             measuring 10,000 square kilometres (3,800 square miles) for 15 years
current exchange rates. The world's biggest auto-maker made an                    and will be given priority mining rights. A contract is expected to be signed
operating loss of $1.4 billion in the April-June quarter, compared to a 211.7     in November. (Source: AFP, 04 August 2011)
billion yen profit a year earlier.(Source: Reuters, 03 August 2011)
                                                                                  Citigroup data theft hits 90,000 in Japan
StanChart profits rise 20% on Asia growth                                         Private data for more than 90,000 customers of Citigroup's Japanese
Standard Chartered, the British-based emerging markets bank, posted               credit-cards subsidiary has been stolen and unlawfully resold. The
record net profits of $2.5 billion in the first half of 2011 as revenues surged   compromised data includes account numbers, names, addresses and
in most of its key Asian markets. Profit after tax of $2.52 billion (1.78         dates of birth but does not include PIN numbers or security codes for the
billion euro) for the six months to June compared with net profit of $2.10        affected cards. No unusual or suspicious credit cards transactions relating
billion a year earlier, and beat analyst expectations of $2.42 billion.           to these customers have been detected at this point. (Source: AFP, 07
Revenues jumped 11% to $8.76 billion in the first half. Standard did not          August 2011)
announce any new job losses, in contrast to rival British banks HSBC and          US loses AAA rating
Barclays, but noted that the group's headcount currently stood at 84,061,
                                                                                  Although stock market in America rebounded nominally, the US saw its
down 1,170 since the start of 2011.Pre-tax profits jumped 17% to $3.64
                                                                                  credit rating lowered to AA+ from AAA by Standard&Poor's. The decision
billion, while record 29% revenue growth in Hong Kong helped to offset a          was prompted by agency's fear that with the nation's leaders remaining far
5% decline in India. (Source: AFP, 04 August 2011)                                apart, the government's ability to manage its finances will be reduced. The
                                                       A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                           Vol. 03, Issue 08, August 2011                                5
global equity markets witnessed their worst week since the financial crisis.      second quarter to $52 billion from a year ago, but market uncertainty is
(Source: Reuters, 06 August 2011)                                                 delaying some deals. Including domestic deals, total global commercial
                                                                                  property investment hit $198 billion in the first six months and may climb
China blasts US over debt problems, calls for dollar oversight                    further to $440 billion by December, barring any big economic setbacks
China roundly condemned the United States for its "debt addiction" and            and if market volatility abates. In 2010, global commercial property
"short sighted" political wrangling and said the world needed a new stable        investment stood at $316 billion. New York attracted the most direct
global reserve currency. China also urged the United States to apply              property investment at $6.3 billion in the second quarter, followed by
"common sense" to "cure its addiction to debts" by cutting military and           London and Toronto. (Source: Reuters, 21 August 2011)
social welfare expenditure. China also said further credit downgrades
would very likely undermine the world economic recovery and trigger fresh         US Gulf spill fund pays out $5b in first year
rounds of financial turmoil. (Source: Reuters, 07 August 2011)                    Victims of BP's disastrous oil spill in the Gulf of Mexico have received
                                                                                  more than $5 billion in compensation since a fund was set up a year ago.
US new jobs surprise with 117,000 surge in July                                   The money has gone to 204,434 individuals and businesses, mainly in the
The US economy generated a higher-than-expected 117,000 jobs in July,             five-state Gulf region: Alabama, Florida, Louisiana, Mississippi and Texas.
cutting the unemployment rate to 9.1% and giving hopes that the                   The compensation fund was created four months after the April 2010
economy has not stalled. The better-than-expected numbers came after              explosion on BP's Deepwater Horizon rig in the Gulf caused the biggest
markets worldwide plunged on worries that the data would show the US              maritime oil spill in history. (Source: AFP, 25 August 2011)
economy headed into stagnation. The private sector generated 154,000
jobs in July, easily offsetting a loss of 37,000 positions in the public sector   Gold hits record above $1,900 on global recession fears
-- many of which came from sweeping layoffs in the state of Minnesota as          Gold topped $1,900 per ounce for a new record but pulled back sharply in
the government shut down due to a political fight over spending and union         later trade as bulls returned to Wall Street and the euro made an upward
benefits. On average, economists had forecast only a net 84,000 jobs              jump. In early Asian trading hours, the precious metal, regarded as a safe
generated.(Source: AFP, 07 August 2011)                                           haven in times of economic turmoil -- rocketed to $1,913.50, but fell in late
                                                                                  New York trade to below $1,830.In recent weeks and months, gold has
S&P's warns of further US downgrade                                               smashed its way through a series of historic peaks on mounting economic
Standard & Poor's managing director said there is a one in three chance           concerns. But after trading around the $1,530 level in June and early July,
of a further US credit rating downgrade over the next six months to two           the metal has made a sharp push higher on worries about the global
years. The United States has struggled to recover from its worst downturn         economy. Barclays Capital has forecast that gold prices will average
in decades, the 2008-2009 recession triggered by the burst of a housing           $1,875 in the fourth quarter and $2,000 per ounce in 2012. (Source: AFP,
bubble.S&P argued that the direction of the country's debt load and rising        25 August 2011)
fiscal deficits meant it could no longer be included among the world's most
risk-worthy sovereign borrowers. Critics have cited S&P's various upbeat          Dollar-supply crunch creating a crisis in Asia
assessments of companies and debt instruments weeks before they failed            A dollar-supply crunch in Europe is creating a shortage in Asia's financial
-- including the packaged mortgage securities that sparked the 2008               centers, pushing up the cost of obtaining the greenback through the swap
financial collapse.(Source: Reuters, 08 August 2011)                              market. The European Central Bank lent dollars for the first time in six
                                                                                  months after one undisclosed bank tapped $500 million from its liquidity
China inflation hits three-year high                                              supply operation on August 17, reflecting the reluctance of global finance
China said its politically sensitive inflation rate rose in July to its highest   companies to lend in the region. European lenders may need to raise
level in more than three years, as the government struggles to rein in            euro 80 billion ($116 billion) through year-end to fund their businesses.
soaring food costs. The country's consumer price index rose 6.5% last             (Source: Bloomberg, 28 August 2011)
month compared to a year earlier, the highest level since June 2008 when
it reached 7.1%. The world's number two economy is slowing while prices           US$ hits Tk 78 in kerb market
continue to rise was data showing that industrial output had eased in last        The exchange rate of US dollar in the open market, known as kerb
month from June. China has been struggling to tame inflation despite              market, hit Tk 78.00 ahead of the upcoming Eid-ul-Fitr. The US currency
restricting the amount of money banks can lend on numerous occasions              has reached its maximum rate at Tk 78 as the demand for the greenback
and hiking interest rates five times since October. Mounting public anger         increased substantially to meet the growing demand of the outbound
over rising food and fuel prices has already caused a series of protests          passengers. A section of people with their family are flying aboard to
this year. China's Producer Price Index (PPI) for July, a measure of              celebrate the Eid festival. This has pushed the exchange rate of US
inflation at the wholesale level, was up 7.5% year-on-year from 7.1% in           currency to a maximum of Tk 78 in the kerb market. (Source: The
June. Output from China's millions of factories and workshops rose 14%            Sylhettimes, 29 August 2011)
year-on-year in July, slightly slower than the 15.1% recorded in June.
(Source: AFP, 10 August 2011)
HSBC to sell US credit card business
                                                                                   BANGLADESH ECONOMY
HSBC announced that it is to sell its United States credit card and retail        US debt crisis likely to leave adverse impact on BD economy
services business to US lender Capital One Financial Corporation. It will
                                                                                  The deepening concerns stemming from the US debt crisis are expected
sell the business in a deal worth around $32.7 billion, including a premium
                                                                                  to have an adverse impact on the Bangladesh's economy, especially on
of about $2.6 billion, in an acquisition that is expected to close in the first
                                                                                  its foreign exchange (forex) reserves. Fears are rising in the country's
half of next year. The deal is subject to governmental and regulatory
approval. The gross assets of the US card business were $30.4 billion as          apparel industry about the possibility of the world's largest economy
at end of June, including $29.6 billion of customer loan balances. The sale       defaulting on repayment of its debt as the US politicians still remain split
comes after HSBC announced massive cost-cutting measures, including               over how to raise the borrowing limit, with the August 2. The world is
plans to save up to $3.5 billion by 2013 and to axe 30,000 jobs globally          paying a close attention to whether the US can reach a deal, before the
over the next two years as it shifts focus to fast-growing markets. (Source:      deadline. They pointed out that China, India and other economies had
AFP, 11 August 2011)                                                              partly deployed their reserves in purchases of gold and holding of other
                                                                                  currencies much earlier.(Source: Priyo, 01 August 2011)
Western Canadian aerospace industry targets Asian markets
Western Canada's aerospace industry is expected to grow significantly by          ADP spending improves a bit
cashing in on its geographical proximity to the blooming Asian markets.           The implementation of Annual Development Programme (ADP) was
Aerospace industry has many advantages to expand in the second                    better last fiscal year, rising by 27% compared to the previous year. The
decade of the 21st century, including its proximity to Asia and favorable         government took an ambitious ADP last fiscal year and after a downward
government policies. The Canadian aerospace industry is currently worth
                                                                                  revision, 92% of the revised programme could be implemented finally. In
about 23 to 24 billion Canadian dollars annually, employing about 83,000
                                                                                  fiscal 2009-10, the implementation rate was 91% of the revised ADP.Like
people. (Source: Xinhua, 14 August 2011)
                                                                                  the previous years, hurried and huge spending marked the last month of
Global property deals rise 50% in Q2                                              the last fiscal year when Tk 6,981 crore was spent against only Tk 836
Global cross-border commercial property investment rose 50% in the                crore in the first month of the fiscal year. Last fiscal year ADP worth Tk
                                                       A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                          Vol. 03, Issue 08, August 2011                                  6
32,830 crore was implemented, whereas the revised allocation was Tk              placed with Boeing for 10 aircraft over the next decade. The 12-year loan
35,880 crore. The original allocation was Tk 38,500 crore. In fiscal 2009-       facility guaranteed by the Export-Import Bank of the United States will be
10, the implementation was Tk 25,917 crore, which was 91% of the                 repaid quarterly. Biman operates an international network spanning 19
revised ADP. The local fund expenditure was Tk 23,166 crore or 97% of            destinations in Asia and Europe through its fleet of 11 aircraft. The airline
the allocation. The utilisation of project aid was Tk 9,665 crore which was      carried a total of 16.20 lakh passengers and 32,838 tonnes of cargo in
81% of the allocation. (Source: The Daily Star, 01 August 2011)                  2010-11. (Source: The Daily Star, 09 August 2011)
Taxpayers showing 20% higher income can avoid scrutiny                           $120m ADB loan set to overhaul city planning of Dhaka, Khulna
The National Board of Revenue (NBR) has introduced a new rule                    The Asian Development Bank (ADB) will provide US$ 120 million in loan
exempting taxpayers, both corporate and individual, from scrutiny of the         to Bangladesh government for overhauling the present messy urban
taxmen provided they (taxpayers) show in their returns, at least, 20 %           planning and infrastructure development and services in Dhaka and
higher income than that of the previous year. The board made the rule            Khulna cities. The Manila-based lender has confirmed the aid as it signed
effective from July 01, especially for the tax returns filed under universal     a loan deal with the government's fund mobilizing agency -- Economic
self-assessment method, to remove fear among the taxpayers relating to           Relations Division (ERD).Of the $170 million project titled "Bangladesh
use of discretionary power of the taxmen.(Source: Hawker, 01 August              City Region Development", the ADB will provide $120 million, with the rest
2011)                                                                            coming from Bangladesh government.(Source: Hawker, 11 August 2011)
Money-whitening scheme faces blow                                                ADB plans to lend $1.5b to ratchet up connectivity, energy co-op in S Asia
Taxpayers will be exempted from scrutiny relating to source of their             The Asian Development Bank (ADB) is planning to lend $1.5 billion to
declared undisclosed income under income tax law only. Other                     improve cross-border connectivity and increase energy cooperation
government agencies will be free to ask questions on such funds.The              among five South Asian countries -- Bangladesh, India, Sri Lanka, Nepal
National Board of Revenue (NBR) is set to bring a change in its Statutory        and Bhutan over a period of three years (2012-2014).Of the total, $1.11
Regulatory Order (SRO) on undisclosed money by clarifying the law.               billion or 74% will be spent against the head of improving cross-border
However, the taxmen will not disclose information of the taxpayers to            connectivity, $325 million or 23% for energy cooperation and the rest of
other agencies, including the law-enforcers, as the tax-law clearly bars         above $40 million or 3% of the total fund has been earmarked for trade
them from doing so. Some 1,923 taxpayers availed the facility in the             facilitation.(Source: Sylhettimes, 11 August 2011)
2009-10 FY. They paid Tk 1.21 billion tax against legalisation of Tk 9.22
billion undeclared income. In the 2007-08 FY, the government collected           Trade deficit expands due to soaring commodity prices
Tk 8.03 billion tax against Tk 88.95 billion undisclosed money of 16,664         The country's overall trade deficit widened more than 42% to $7.328
taxpayers. (Source: Silobreaker, 05 August 2011)                                 billion in the last fiscal as the import bill rose sharply due to price-hike of
                                                                                 commodities in the global market. In FY11, export earnings stood at
Customs earn revenue of TK 8.1520b in NWregion in 2010-11                        $23.008 billion against the import payments of $30.336 billion. Trade
The Commissionerate of Customs, Excise & Value Added Tax (VAT)                   deficit was $5.155 billion in the previous 2009-10 fiscal year. Food grain
earned revenue worth around Taka 8.1520 billion from everywhere in the           imports stood a record 5.309 million tonnes in the FY11 compared to
country's northwestern region during the last 2010-2011 fiscal. The              3.452 million tonnes in the previous fiscal. (Source: Priyo, 17 August
collection from the internal sources was Taka 6.2613 billion against the         2011)
target of Taka 6.14 billion while the earning from the import sources was
Taka 1.8908 billion against the target of Taka 3 billion.(Source: The            Govt plans to strike FTA with Turkey
Financial Express, 07 August 2011)                                               Bangladesh plans to sign a Free Trade Agreement (FTA) with Turkey as it
                                                                                 seeks to boost trade with the European Muslim nation. Bangladesh
NBR withdraws tax holiday facility from tourism sector
                                                                                 mainly exports jute goods, readymade garments, cotton wastes, leather
The National Board of Revenue (NBR) has withdrawn tax holiday facility           and leather products to Turkey. On the other hand it imports machinery,
on investment in the country's tourism sector from the current Fiscal Year       mechanical and electrical appliances, vegetable products, food items,
(FY), 2011-12, as a part of its move to trim the list of beneficiaries the       textile articles, and mineral products, among others. During the July-
facility. The tourism sector investors were enjoying the facility since 1992     December period of just concluded fiscal year the country exported goods
until the previous FY (2010-11). A number of posh hotels and motels have
                                                                                 worth US$323.35 million to Turkey while imported goods worth $75.29
been set up at different tourist spots of the country during the last few
                                                                                 million from Ankara. In fiscal 2010-11 Bangladesh exported apparel worth
years following a substantial amount of investment in the sector.
                                                                                 US$650 million to Turkey.(Source: Hawker, 17 August 2011)
However, tourism sector insiders said investment in the sector remained
confined only to building luxurious hotels and motels with many other            Forex reserve marks rise
areas attracting scanty investment.(Source: Hawker,08 August 2011)
                                                                                 Bangladesh's foreign currency reserve has marked a rise as it stood at
Exports rise 28% in July                                                         US$10832.16 million on August 16, an increase of $450.9 million over
Exports increased by 28.70% in the first month of the current fiscal year        $10381.26 million registered on July 31.The foreign exchange reserve
compared with the same month last year, according to Export Promotion            was, however, $10920.48 million on August 16 last year. Revenue
Bureau (EPB) data. However, exports faced a decline in the month of July         collection by the National Board of Revenue (NBR) for the last fiscal was
compared with the previous month, when earnings rose by 40%.In July,             encouraging, posting nearly a 27.48 % growth to stand at Tk 790.91
Bangladesh earned $2.34 billion from its overseas trade, while the               billion.(Source: The Financial Express, 19 August 2011)
amount was $1.81 billion in the same month last year. The annual export          Upward trend to continue for higher food prices
target for the current fiscal year has been fixed at $26.50 billion, while the
                                                                                 The country's inflation as measured by Consumers' Price Index (CPI)
target for the month of July was $2.18 billion. Exports of some major
                                                                                 moved up further in the month of July mainly because of increase in
products such as knitwear, woven garments, jute and jute goods, home
                                                                                 prices of both food and non-food items. The rate of annual average
textile, footwear and frozen foods marked a rise in July. In July,
                                                                                 inflation went up by 0.31 percentage point to 9.11% in July from 8.80% of
Bangladesh exported knitwear worth $1 billion and woven worth $888
                                                                                 the previous month while the point-to-point inflation rate rose to 10.96%
million, registering a 26.20% and 32.28% rise respectively compared with
                                                                                 from 10.17%.The food price inflation rose to 13.40% in July last from
the same month a year earlier. However, exports of cement, specialized
                                                                                 12.51% of the previous month while that of non-food items reached
textile fabrics, ceramic products, glass and glassware, bicycle, ships,
                                                                                 6.46% from 5.73% on point-to-point basis. (Source: The Financial
boats and floating structures have gone down. (Source: The Daily Star,
                                                                                 Express, 23 August 2011)
09 August 2011)
                                                                                 FATF asks govt to revise its action plan on money laundering
JP Morgan to bankroll Biman aircraft
                                                                                 The Financial Action Task Force (FATF) on money laundering has asked
JP Morgan, a global financial services firm, has announced it would
provide Biman Bangladesh Airlines Ltd with a loan of $277 million to             the government to revise its action plan on combating money laundering.
support the airline's long-term expansion plan. With the facility, the           The government earlier submitted a plan to the Task Force and Asia
national carrier will purchase two new Boeing aircraft to expand its             Pacific Group (APG) on money laundering. The Financial Action Task
network. It will be the first aircraft delivery from Biman's 2008 order          Force (FATF) is an inter-governmental body working for the development
                                                      A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                        Vol. 03, Issue 08, August 2011                                  7
and promotion of policies, both at national and international levels, to       mainly monitor whether the listed firms follow the securities rules, prepare
combat money laundering and terrorist financing. The government in             accurate financial statements and disclose the financials timely. The
June, 2010 submitted an Action Plan to FATF outlining its desire to tighten    department will have to report to the commission on the activities of the
the money laundering and terrorist financing. (Source: Silobreaker, 24         listed companies and findings on a regular basis. The department will
August 2011)                                                                   also examine the accuracy, validity and transparency of the financial
                                                                               reports submitted by the listed firms. (Source: The Daily Star, 01 August
IDRA report finds scope for new life insurance cos                             2011)
In June, the Ministry of Finance (MoF) asked the The Insurance
Development and Regulatory Authority (IDRA) pre to prepare a detailed          BB caps interest rate on fertilizer import finance
study on the country's life and non-life insurance companies to issue new      Bangladesh Bank (BB) advised all commercial banks not to charge more
licences. The insurance regulator in its report suggested for a merger of a    than 14% interest on financing for fertilizer import. The central bank said
number of weak general insurance companies as they have been                   the move was meant to ensure adequate supply of fertilizer in the market
struggling to survive for long. There are 62 insurance companies               by cutting import costs of the agriculture input. If fertilizer supply could be
operating in the country. Of them, 43 are general insurers and 17 life         ensured, food production will increase, which will ease inflation. Some
insurers. The remaining two -- one life and another non-life -- are owned      banks have been charging 18-20% interest on loans for fertilizer import.
by the government. The total premiums earned by life insurers were             That's why Bangladesh Bank has fixed a ceiling on the interest rate on
nearly Tk 50 billion in 2009, up by 28% from 2008. Non-life insurance          fertilizer imports. (Source: The Daily Star, 01 August 2011)
companies' premiums grew by 13.71% to Tk 13.90 billion in 2009.
(Source: Hawker, 27 August 2011)                                               SEC plans to bring discipline in Omnibus Accounts
                                                                               The Securities and Exchange Commission (SEC) has planned
Eid sale on track to top Tk 100b                                               regulations for the Omnibus Accounts in two weeks as they were the "real
Sale of merchandise including clothing across the country during the last      culprits" behind the December-January stock market crash. An omnibus
leg of holy month of Ramadan is expected to touch to Tk 100 billion. This      account is a specific stock holding account that involves multiple
year's sale is lower compared to the last year citing bad weather and          investors. The individual investor does not have his or her name attached
price hike of the products.(Source: The Financial Express, 29 August           to the account, but still they are actual stock holders. According to the
2011)                                                                          probe body's report, Tk2,348 crore (Tk23.48 billion) was traded from nine
                                                                               omnibus accounts of the ICB alone. (Source: Hawker, 03 August 2011)
India to pay no tax, but charges for cargo traffic
India is not willing to pay taxes to Bangladesh for goods' movement from       Probashi bank starts lending for jobseekers
one part of India to another or to a third country through Bangladesh          Some 70 Bangladeshi overseas jobseekers went to different countries in
linking the Chittagong and Mongla seaports. However, New Delhi will pay        the Middle East, Republic of Korea (ROK) and Singapore in the last three
charges for transportation, services and transit to transport goods through    months with loans from Probashi Kalyan Bank (PKB).The new bank has
15 routes, all linked to Chittagong and Mongla. India gave the proposal        provided loans amounting to Tk 7.0 million at 9.0 % interest rate. The
through an official draft document styled "Protocol between India and          bank would provide loans to return migrants so that they can start their
Bangladesh for arrangements for the use of Chittagong and Mongla ports         own enterprises or projects. (Source: Hawker, 03 August 2011)
by India”. The protocol has 10 articles where it contains the provisions for
exemptions from customs duties except charges for transportation,              Bid to stabilise capital market
services and transit. (Source: The Daily Star, 29 August 2011)                 The central bank has suggested the authorities concerned for taking
                                                                               effective measures to increase the supply of securities for stabilising the
                 Selected Macroeconomic Indicators                             country's stock market. The report also said attracting new companies
                                                                               into issuing equity in the capital market may be facilitated by reforms in
                                Amount/Rate            Amount/Rate             the current tax structure that keeps borrowing more attractive rather than
                              (Reference Date)       (Reference Date)          raising capital through issuing securities in the form of equity.(Source:
Foreign Exchange Reserve                                                       The Financial Express, 07 August 2011)
                                 10,992.02              10,985.59
      (In million US$)        (August 23, 2010)      (August 23, 2011)         BB moves to better monitor non-banks
BDT-Dollar Exchange Rate           69.5408                73.9846              The Bangladesh Bank (BB) has started strict monitoring of Non-Bank
       (Average)               (August 23, 2010)      (August 23, 2011)        Financial Institutions (NBFIs) as their involvement in the financial market
Wage Earner's Remittance                                                       is on the rise. The BB has asked the non-banks to send it a list of top 10
                                    857.31                1,028.14
    (In million US$)                                                           loan defaulters every three months. Besides, the NBFIs will also have to
                                  (July, 2010)         (July, 2011 P*)
                                                                               send the central bank information about the cases they file with the courts
           Export                   1,817.81              2,339.52             against the loan defaulters. The total number of banks in the country,
      (In million US$)            (July, 2010)         (July, 2011 P*)         including local and foreign, is 47, while there are 30 non-banks that have
           Import                  2,200.20                                    recently increased their involvement in the financial sector compared to
      (In million US$)           (June, 2010)         (June, 2011 P*)          the past. Twenty of them have already collected Tk 250 crore from the
                                                                               stockmarket through initial public offerings. (Source: The Daily Star, 07
 Current Account Balance              758.0                383.0               August 2011)
     (In million US$)             (June, 2010)         (June, 2011P*)
                                                                               SEC urges merchant banks to focus on discretionary portfolio management
     GDP Growth Rate                 6.70                   6.66
         (In %)                 (2009-2010 R*)         (2010-2011 P*)          The securities regulator asked the merchant banks to concentrate on
                                                                               discretionary portfolio management to stabilise the stock market by
     Broad Money (M2)             36,3031.20             44,0520.00            ensuring smooth handling of their clients' funds and reducing investment
        (In crore Tk.)           (June, 2010)          (June, 2011P*)          risks. The instruction came from a meeting held at the Securities and
     Rate of Inflation              10.17                   10.96              Exchange Commission (SEC) to review the overall situation of the
   (Point to Point Basis)        (June, 2011)            (July 2011)           market, following the plunge of stock prices and subsequent
                                                                               demonstrations by aggrieved investors.(Source: The Financial Express,
P* -Provisional R*-Revised (Source: Bangladesh Bank)
                                                                               09 August 2011)

  FINANCE & BANKING                                                            Tax exemption withdrawal on MF issuers to leave the industry in tatters
                                                                               The withdrawal of tax exemption on issuers of mutual funds will leave the
DSE opens corporate governance wing                                            nascent industry in tatters. The budget for the fiscal 2011-12 imposed tax
The premier bourse launched a new department to help strengthen the            on sponsors/issuers of mutual funds, which operators termed a blow.
practice of corporate governance among listed companies and make               Industry insiders said the already listed 36 mutual funds and more 36
them more transparent and accountable. The new division -- Department          (which are in the pipeline) will face tremendous pressure to sustain due to
of Corporate Governance and Financial Reporting Compliance -- will             the sudden imposition of tax. Mutual funds have a history of providing
                                                        A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                             Vol. 03, Issue 08, August 2011                                    8
market stability and facilitating institutionalization of capital markets. The     credit facilities. Term loan is a funded credit to be paid in installments for a
country has now 36 mutual funds with an issued capital of Tk 25,719                fixed period and non-funded is a loan given against letter of credit or letter
million.(Source: Priyo, 10 August 2011)                                            of guarantor. (Source: The Daily Star, 28 August 2011)
Banks tighten consumer loans
Sliding revenue and inflationary concern have forced banks to tighten                                       Selected Financial Indicators
consumer loans even during this year's biggest festival Eid-ul-Fitr. Banks
offer household loans to help consumers buy goods like television, freeze,                                           Amount/Rate               Amount/Rate
air conditioner and many other home appliances, and it was common in                                               (Reference Date)          (Reference Date)
past festivals. The banks' offers of discounts like reduced rates and
                                                                                       Share Price Index               6,741.38                  6,045.63
waivers on administrative and processing fees to rope in customers are
also missing this time. Most of the banks admit that tight monetary                         (DSE)                  (23 August, 2010)         (23 August, 2011)
conditions and soaring inflation are making things difficult for them. This
                                                                                       Share Price Index                20,035.21                17,261.90
year, it will be difficult for shoppers to buy things on credit. The overall
inflation rose to 8.80% in fiscal 2010-11, up from 7.31% a year ago. On a                   (CSE)                   (23 August, 2010)        (23 August, 2011)
point-to-point basis, the overall inflation fell slightly to 10.17% in June from
                                                                                      Call Money Rate                     7.44                     14.80
10.20% a month before. (Source: The Daily Star, 11 August 2011)
                                                                                   (Weighted Average Rate)          (23 August, 2010)        (23 August, 2011)
Insurance regulator rates credit rating agencies poorly
                                                                                        Reserve Money                   693,90.10                97,493.50
The insurance regulator has expressed its serious reservation about the
                                                                                         (In crore Tk.)               (June, 2010)            (June, 2011 P*)
assessments made by country's credit rating agencies to relation to
insurers saying their opinions in many cases do not reflect the real picture                                              8.67                      7.14
of the companies. The Insurance and Development Regulatory Authority                     Gross NPL (%)                (June, 2010)              (June, 2011)
(IDRA) expressed its opinion while exchanging views with the country's
four credit-rating agencies at its office in the city. Currently, Bangladesh                                              1.67                      1.29
has four credit-rating agencies: Credit Rating and Information Services                   Net NPL (%)                 (June, 2010)              (June, 2011)
(CRISL), Credit Rating Agencies in Bangladesh (CRAB), National Credit
Rating (NCR) and Emerging Credit Rating (ECR).The Securities and                           LC Opening                   28,783.40                 38,581.12
Exchange Commission issues licences to the rating agencies, who charge                   (In million US$)          (July-June 2009-10)      (July-June 2010-11)
around Tk 400,000 for their rating services. (Source: Sylhettimes, 13
August 2011)                                                                              LC Settlement                 23,053.10                 31,952.18
                                                                                         (In million US$)          (July-June 2009-10)      (July-June 2010-11)
SEC sets uniform share face value at Tk 10
The securities regulator ordered all listed companies and mutual funds to          P* -Provisional (Source: Bangladesh Bank)
convert the face-value of their shares and units into Tk 10 each by
November 30 this year. The Securities and Exchange Commission (SEC)
took the decision at its board meeting headed by its chairman, setting the
stage for trading of all shares at a uniform price from December 1 this            NRBs to set up second power plant
year. Presently, the face-value of 124 companies and 12 mutual funds is
                                                                                   Baraka Patenga Power Ltd will invest Tk 300 crore to produce 50
Tk 100 each. The face-value of three corporate bonds is Tk 1000 and one
                                                                                   megawatt of electricity within next 15 months to help narrow the demand
mutual fund is face-valued at taka one each. (Source: The Daily-Sun, 24
                                                                                   and supply gap. Barakatullah Electro Dynamics is an initiative of a group
August 2011)
                                                                                   of Non-Resident Bangladeshis (NRBs).Located at Patenga, Chittagong,
Call money rate hits 20% to meet cash demand                                       the furnace oil-powered plant will supply electricity for 15 years. The
                                                                                   company will charge $9.881 for per kwh.The Patenga plant will be the
The inter-bank call money rate hit 20% as there was a substantial amount
                                                                                   second power project financed by the NRBs, who have already financed a
of cash withdrawal from banks, ahead of the Eid-ul-Fitr festival. Most
                                                                                   51-megawatt plant in Fenchuganj.The deal comes as Bangladesh
deals were settled at rates varying between 18.00% and 20.00%. Most
                                                                                   struggles to manage a soaring demand for electricity. The country
branches of the banks, especially at Motijheel, Dilkusha and other
                                                                                   produces 5,000MW of power that could light only 40% of its total
commercial hubs of the capital, witnessed long queues of people to
                                                                                   households and the daily load-shedding stands at about 700MW now.
withdraw money before the Eid festival. In the foreign exchange market,
                                                                                   (Source: The Daily Star, 01 August 2011)
the Bangladesh Taka (BDT) continued to appreciate modestly against the
US dollar, as the inflow of the foreign currency increased in the market.          Mega project to stop seepage at Titas gas field starts
The local currency gained by 1.20% against the greenback during the last
                                                                                   Bangladesh Gas Fields Company Limited (BGFCL), a subsidiary company
four consecutive working days. (Source: Silobreaker, 25 August 2011)
                                                                                   of Petrobangla, has finally started implementing a Tk 10 billion mega
Lure of quick profits drives banks                                                 project namely "Gas Seepage Control and Appraisal & Development of
                                                                                   Titas Gas Field" to halt gas seepage from different pockets of the Titas
The commercial banks, especially the private ones, make a big amount of
                                                                                   gas field at Anandapur, Shyampur and Bakail areas under Brahmanbaria
profit every year, creating interest among influential persons to get license
                                                                                   Sadar upazila, five years after the problem was first reported. (Source:
for setting up new banks. Influential people create pressure on the
                                                                                   Silobreaker, 02 August 2011)
government high-ups for getting license to set up new banks with the aim
of making quick profit and taking various advantages from the banks. The           Work on 450mw Siddhirganj power plant may start this yr
trend of giving permission to set up banks in the private sector started in
                                                                                   Work on Siddhirganj 450-megawatt (mw) power generation project which
the 1980s to make the banking business competitive and provide low-cost
                                                                                   remains suspended for quite a long time may start this year as the
services to the clients. But the banks charge higher interest to maximize
                                                                                   government has relaxed tender provisions for bidders and selected one to
their profit and their non-interest income is also larger as they take higher
                                                                                   begin installation. The power project faced setback in its initial stage of
charges and fees. (Source: The Daily Star, 28 August 2011)
                                                                                   bidding in early 2009 when the World Bank (WB) refused to finance the
25 banks face credit risk                                                          scheme due to selection of a bidder for machinery supply from a black-
                                                                                   listed German firm.(Source: Highbeam,05 August 2011)
Twenty-five of 48 banks operating in Bangladesh may slip into trouble in
maintaining adequate capital if top three borrowers were defaulted. The            Offshore gas reserve not yet known
test result has worried the regulator, Bangladesh Bank, as the Capital
                                                                                   Bangladesh should take up projects to conduct a detailed seismic survey in all of
Adequacy Ratio (CAR) of these 25 banks would fall by at least 2
                                                                                   its offshore gas blocks in the Bay of Bengal to know the actual reserves. The
percentage points from required 9% of their capital if these three
                                                                                   proven reserves in the 14 on-shore blocks of the country have now come down
borrowers get defaulted. And if top 10 borrowers were defaulted, the CAR
                                                                                   to 10.8 trillion cubic feet. The country is now facing a supply shortage of 500
would come down by almost half to 4.83% of the entire banking industry.
                                                                                   million cft of gas. The authorities can supply 2000 mcft against the requirement
The banker said they are following the regulations of the BB in terms of
                                                                                   for 2500 cft of gas.(Source: The Financial Express, 06 August 2011)
single lending cap, which is 15% for funded and 35% for non-funded
                                                       A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                           Vol. 03, Issue 08, August 2011                                9
Reliance gets formal approval for BP deal                                         in the lead of the agriculture sector as well as overall exports, only after
India's Reliance Industries said it has received formal approval from the         Ready-Made Garments (RMG) in the first month of the current financial
Indian government to sell a 30% stake in some of its oil and gas blocks to        year.(Source: The Financial Express, 12 August 2011)
Britain's BP for $7.2 billion. The sale is one of the largest foreign direct      Shrimp exporters' push for pocketing public fund
investments in India since the country started opening up its economy to
the world two decades ago. The initial proposal was for Reliance to sell          Shrimp exporters are pressing the government for providing them with Tk
the stake in 23 blocks but the government cleared only 21 blocks.                 4.25 billion in compensation, despite no shipment during the last global
Reliance, India's largest private firm, has said it would continue to seek        recession. Only 10-15 frozen food exporters out of nearly 100 made
approval for the remaining two blocks. The BP-Reliance deal also                  shipment during the Fiscal Year (FY) 2008-09 and FY 2009-10 when the
envisages a performance payment of up to $1.8 billion if the tie-up leads         world economy sputtered. The government that time provided
to the discovery of more oil. (Source: AFP, 10 August 2011)                       entrepreneurs facilities on their bank loans which helped the sector to
                                                                                  earn 44% growth in 2010-11 fiscal year. Statistics show that the
Furnace oil price hike hits local industries hard                                 Bangladesh Frozen Foods Exporters Association (BFFEA) members
Increase in furnace oil price in local market increased production cost of        exported shrimp and fish worth Tk 36.63 billion in fiscal 2007-08, of Tk
the manufacturing industries, which opted for the alternative fuel in             31.27 billion in 2008-09, of Tk 30.25 billion in 2009-10 and of Tk 62.23
absence of adequate gas supply. Earlier, some local industries converted          billion in 2010-11.(Source: Priyo, 23 August 2011)
their fuel system to furnace oil-based due to high price of diesel. Now they      Export earnings from jute sacks, bags up by 81%
find the effort useless, as the price gap between furnace oil and diesel
narrowed down significantly during the last eight years. About 80% of the         Export earnings from local jute sacks and bags went up by around 81%
import will be consumed by the newly constructed and under-construction           during the first month of the current financial year (2011-12) due to the
power plants. It will cost the Bangladesh Petroleum Corporation (BPC)             policy support from the government as well as growing demand in the
US$ 1.3 billion to foot the furnace oil import bill. (Source: Priyo, 15 August    overseas market for the products. Presently state-run jute mills have
2011)                                                                             performed considerably well and the export volume of jute shopping bags
                                                                                  through private initiative has also been increased by this time. According
PDB signs deals for three power plants                                            to an Export Promotion Bureau data, the country earned from jute sacks
The Power Development Board (PDB) signed contracts with two private               and bags around $ 17.03 million in July 2011, up by 80.98 % from $ 9.41
consortiums to set up three independent power plants with combined                million fetched in July 2010.(Source: Hawker, 23 August 2011
capacity of 302 megawatts. The plants with 99.38MW, 94.84MW and
108MW will be set up in Khulna, Jamalpur and Chittagong by November
2012. Malaysia's Mutiara Consolidated Sdn Bhd and Power Pac Holdings,               READYMADE GARMENTS
a sister concern of local business house Sikder Group, will set up the            Keraniganj apparel makers meet 70% local demand
Khulna furnace oil-based plant. The Jamalpur plant will be based on dual
                                                                                  The soaring prices of fabrics apparently did not hit the apparel
fuel.PDB will buy each unit of electricity from the Khulna plant at average
                                                                                  manufacturers at Keraniganj, popularly called Bangladesh's Shaoxing city
tariffs of Tk 6.69 while the Jamalpur plant's tariff is Tk 6.98. A consortium
                                                                                  textile hub, as the small garment units were busy making clothings round-
of Bangladesh Confidence Cement Ltd, UK-based Rurelec Plc and
                                                                                  the clock. The hub meets around 70% requirement of readymade
Bangladesh's Energy Pac Generation Ltd will set up the furnace oil-based
                                                                                  garments in the country. The hub has employed over 300,000 people to
Chittagong project. The power board will purchase each unit of power
                                                                                  run sewing machines and use fabrics produced by local textile mills. Each
from the port city plant at Tk 7.02. (Source: The Daily Star, 26 August
                                                                                  of the factories has 5-50 sewing machines. (Source: Congoo, 02 August

  AGRICULTURE                                                                     RMG faces export order crisis
                                                                                  The country's export seems to suffer a significant fall as the key export-
Closed fertilizer factories incur Tk 19.56b loss                                  driver ReadyMade Garment (RMG) sector is facing decrease in export
The government has incurred a financial loss to the tune of Tk 19.56              order, triggered by "economic worries" in the European Union and the
billion during the last four and a half months as it kept closed two fertilizer   USA. The RMG export order dropped by 20-30% in recent months with
factories, diverting the gas consumed by them to power plants.Of the Tk           most of the factories remaining idle or near idle due to declining work
19.56 billion loss, Tk 14.59 billion was paid against salaries and                orders. The government has set a new export target of US$ 26.37 billion
allowances of about 1,749 employees of the two factories and on account           for the current fiscal (2011-2012), a 15% rise compared to that of a year
of charges against maintenance and other matters. Rest of the fund was            ago. The export earnings surpassed the yearly target of $18.5 billion,
expended against import of excess amount of urea fertilizer which was             buoyed by shipments of RMG and jute and jute goods. In fiscal 2009-10,
necessary due to the closure of the factories. The country imported               Bangladesh exported goods worth $16.20 billion. (Source: The Daily Star,
109,388 tonnes of urea fertilizer than that of the corresponding period of        06 August 2011)
the last year.(Source: The Financial Express, 06 August 2011)                     Over 100 new RMG units to be set up
Heavy downpour damages aman seedbeds, plants                                      Local entrepreneurs of the ReadyMade Garment (RMG) sector have
Heavy downpour flooded large areas in Patuakhali and Pabna districts,             planned to set up over one hundred new factories to cater to the growing
badly affecting agriculture and disrupting normal life. Lowland areas and         demand in the international market and provide more than 0.5 million new
over 100 chars (islands) in seven upazilas under the district got flooded         employments. The entrepreneurs have invested around Tk 30 billion to
due to heavy rain and tidal surge. Over 2000 hectares of aman seedbeds            set up the new factories at Dhaka, Chittagong, Savar, Gazipur, Sreepur,
went under water. Lowland areas and over 100 islands in seven upazilas            Narayanganj and Narsingdi.The RMG sector, country's overall exports
in the district are flooded with 5-8 feet high tidal surge and rainwater. Over    leader, fetched US$ 18.7 billion in the 2010-11 fiscal year.(Source:
40 islands in Galachipa, 20 in Dasmina, 15 in Kalapara, 10 each in Baufal         Hawker, 08 August 2011)
and Mirzaganj upazilas, five in Dumki and two in Sadar upazila have been
flooded with tidal water under the influence of depression.Aman plants on         Bangladesh looks to new markets for apparel
at least 1,000 hectares of land has been washed away in Pabna Sadar,              Export Promotion Bureau (EPB) looks to new potential overseas markets
Ishwardi, Atghoria and Chatmohar upazilas under the district during last          for the readymade garment industry to propel the growth of the sector.
few days. (Source: The Daily Star, 11 August 2011)                                Apart from these anticipated countries, India and China are becoming the
                                                                                  potential markets for RMG export as the export rates of knitwear and
Agri sector shows tremendous growth in export
                                                                                  woven items are on the rise. Bangladesh got the benefit of the global
The overall agriculture sector, both traditional and non- traditional,            apparel market after phasing out MFA, and developed counties started
including food crop, cash crop, fisheries, leather and leather goods has
                                                                                  rising their labour cost. (Source: The Daily Star, 11 August 2011)
exhibited a tremendous export performance by fetching more than
$204.01 million in the month of July of 2011-12 Financial Year (FY).It was        BD RMG export to Japan might cross $1.0b by next 2 years
nearly 35 % growth compared to that of the corresponding period of FY11,          Bangladeshi ReadyMade Garment (RMG) export to Japan might cross the
when more than $151.24 million was counted. The main cash crop jute is            billion-dollar-mark by the next two years, as Japanese buyers are
                                                       A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                          Vol. 03, Issue 08, August 2011                               10
gradually getting interested in Bangladeshi products. Japanese lab testing       second threat besides a possible double-dip recession: increased
and quality inspection companies are visiting Bangladesh to survey their         competition from social media. Monster serves as an illustration of how
investment potentials, following a strong presence of Japanese apparel           rapidly sites like LinkedIn and Facebook are creating wrenching changes
buyers here. Japan is the latest lucrative destination for Bangladeshi RMG       for companies in the recruitment business. LinkedIn's Hiring Solutions
export. (Source: Highbeam, 13 August 2011)                                       business, roughly half of its sales, is forecast to reach $384 million in
                                                                                 revenue next year from 2011's estimated $243 million. (Source: Reuters,
Banks cut loans to spinners hit by volatile cotton prices                        26 August 2011)
Commercial banks have restricted credit flow to the spinning mills as the
once booming industry is now struggling to stay above water due to
volatile cotton prices and an acute energy crisis. Bankers said they are           MISCELLANEOUS
not going for any further exposure of their credit fund to the sector as they
are not sure whether the spinning mills will be in a position to repay the       Boom time beckons local shipbuilders
loans in time -- a fear stemming from the spinners' recent heavy                 Boom time beckons Bangladesh's fledgling shipbuilding industry as nearly
losses.(Source: Congoo, 19 August 2011)                                          a dozen foreign buyers are on a bargain-hunt for local ship makers to
                                                                                 place orders worth hundreds of millions of dollars. Local shipbuilders said
                                                                                 they are passing busy time negotiating with some of the top vessel and
  IT & TELECOMMUNICATION                                                         dredger owning companies of western Europe, the US and South and
                                                                                 East Asia. They have exported nearly $100 million worth of vessels till
Google+, Apple's iCloud keep developers keen                                     June 2011. (Source: Congoo, 01 August 2011)
Mobile developers more than ever want to devote their energies to writing        BSRM plans 190MW power plant
apps for Apple's iOS and Google's Android platforms at the expense of
their less popular rivals. Apple and Google, already the favorites among         Local steel conglomerate Bangladesh Steel Re-Rolling Mills Ltd (BSRM)
developers, are likely to gain even more traction thanks to game-changing        Group is set to establish a merchant power plant to support its expansion
new services. Millions are already signing up for Google+, the search            in Chittagong. Initially, the group plans to spend Tk 3,000 crore for the
engine company's infant social network that could present a formidable           power plant, and has recently received the green light from the
challenge to Facebook. As many developers plan to integrate Google+ as           government to join the national grid. After completion of the project, the
Twitter into their applications.The moves make it more difficult for the likes   company would produce 190 megawatts of electricity. Now the group is
of Microsoft, Hewlett-Packard and Research In Motion to bridge the gap           awaiting a government approval for land acquisition to build up
and convince developers to invest time and energy in their                       infrastructure for the plant. BSRM Steels started its operation in June
platforms.(Source: Reuters, 04 August 2011)                                      2008 and now has an annual production capacity of more than 5 lakh
                                                                                 tonnes of steel rods.(Source: The Daily Star, 03 August 2011)
Banglalion to raise Tk 400cr through bonds
                                                                                 Gold price marks further rise in local market
Banglalion Communications Ltd will raise Tk 400 crore through issuing
zero coupon bonds. The bonds have an option of 18% conversion into               The price of gold has reached Tk 55,287 per bhori as the local jewellers
ordinary shares of Banglalion, a leading WiMax data and telecoms service         raised the price by Tk 1451 following the recent price hike of the precious
provider. It organized a roadshow for the bonds at Ruposhi Bangla Hotel          metal in the international market. The newly fixed price is as follows: 22-
in Dhaka. A zero coupon bond is a debt instrument that has no periodic           carat gold Tk 55,287, 21-carat Tk 52,837, 18-carat Tk 46,540 and
interest. At maturity, the face value of the bond is repaid or redeemed.         traditional gold Tk 35,800 a bhori. The price of gold increased on three
Industrial and Infrastructure Development Finance Company (IIDFC) is             occasions within 14 days from August 6 to August 19 due to the
the trustee for the issue of the bonds and IIDFC Capital is the issue            continuous price hike in the international market.(Source: Hawker, 20
manager. (Source: The Daily Star, 10 August 2011)                                August 2011)

Apple blocks Samsung from selling Galaxy tablet in EU                            Container handling clocks 21 % growth at Ctg Port

Apple Inc scored a big victory in its patent infringement battle against         Container handling in Chittagong Port increased 21% to a record 1.47
Samsung Electronics after a German court temporarily barred the Korean           million TEUs (Twenty-Foot Equivalent Units) in the 2010-11 financial year.
firm from selling its flagship Galaxy tablet in the European Union except        The country's premier port, which accounted for 92% of Bangladesh's $55
the Netherlands. The court order comes a week after Samsung was                  billion foreign trade, handled 1.12 million TEUs export and import cargoes
forced to delay the Australian launch of its latest Galaxy tablet because of     and 350,380 TEU empty containers. In 2009-10 fiscal year the port
a similar lawsuit. Apple has said Samsung's Galaxy line of mobile phones         handled 1.12 TEUs, posting a growth of around 10% over the previous
and tablets "slavishly" copied the iPhone and iPad. It has sued in the           fiscal. (Source: The Financial Express, 25 August 2011)
United States, Australia and elsewhere. Samsung, whose tablets are               Govt allocates over Tk 3.08b to BSCIC projects
based on Google Inc's Android software, has countersued Apple.
Samsung's mobile unit, which includes handsets and tablet pcs,                   The government has allocated more than Tk 3.08 billion to the
generated 30 % of the technology giant's revenue in the second quarter.          implementation of nine projects under Bangladesh Small and Cottage
The bulk of the rest comes from memory chips and televisions, sectors            Industries Corporation (BSCIC).The nine projects are Leather Industrial
where Samsung is the global leader. (Source: Reuters, 11 August 2011)            Estate at Savar, Active Pharmaceutical Ingredient (API) Park at
                                                                                 Munshiganj, Benarasi Palli Development Project at Rangpur, Mirsarai
China tops US as world's biggest pc market                                       Industrial Estate, Gopalgonj Industrial Estate Extension, Satranji Industry
China eclipsed the United States as the world's largest personal-computer        Development Project at Rangpur, Comilla Industrial Estate Extension,
market in the second quarter, and is set to capture the full-year title in       BSCIC Special Economic Zone at Kushtia and Sirajganj Industrial Park.
2012. Pc shipments in China rose to about 18.5 million units in the              All the nine projects are scheduled to be completed by June, 2014.
quarter, compared to 17.7 million units in the United States. The                (Source: Silobreaker, 26 August 2011)
shipments were worth $11.9 billion and $11.7 billion, respectively. During
the April-June period, China's market share of global pc shipments
increased to 22%, surpassing the 21% share held by the world's biggest
                                                                                   STRATEGIC MOVES OF FIs
economy. The data includes desktops, portables and mini-notebooks, but           bKash teams up with Fundamo on mobile banking
not handhelds, such as tablets, the research firm said in a global quarterly
report. International Data Corporation (IDC) forecast that 85.2 million units    Newly formed mobile financial services provider, bKash, has recently
will be shipped in China in 2012, compared to 76.6 million in the US.            selected a Visa company, Fundamo, to power its services in Bangladesh.
(Source: AFP, 25 August 2011)                                                    Launched in July this year, bKash is a joint venture between BRAC Bank
                                                                                 and US-based Money in Motion that aims to serve 83% of the population
Facebook, LinkedIn threaten to slay                                  living on less than $2 a day with “convenient, affordable and reliable”
Shares of the parent of online job board are down nearly 70          mobile financial services. Through the deal, Fundamo will facilitate the
% this year, with most of that loss coming since early July. A company           delivery of mobile financial services to the un-banked and under-banked
that once boasted a multi-billion dollar market valuation is now worth less      mobile subscribers in Bangladesh. bKash will enable a large portion of the
than $1 billion. Monster has fallen harder than peers because it faces a         population to get their first access to basic and secure financial services.
                                                                                 Fundamo is a wholly owned subsidiary of Visa Inc. and a leading platform
                                                      A Newsletter of Research & Development Division, Prime Bank Limited
                                                                                         Vol. 03, Issue 08, August 2011                                     11
provider of mobile financial services for mobile network operators and          Green Delta bags WorldCoB Award
financial institutions. (Source: The Daily Star, 05 August 2011)                Green Delta Insurance Company Ltd has won the World Confederation of
100 branch of DBBL                                                              Business (WorldCoB) Award 2011 for its leadership, excellence in
                                                                                management, quality and marketing. WorldCoB, USA hosts this
Land Minister inaugurates the 100 branch of Dutch-Bangla Bank at
                                                                                programme every year to honour the business organizations of the world
Digpait Union in Jamalpur. The bank's Managing Director KS Tabrez was
                                                                                for their quality and services. Green Delta Insurance-the leading non life
also present. (Source: The Daily Star, 07 August 2011)
                                                                                insurance company-has been providing services to its clients for last 25
StanChart launches special services for young professionals                     years.(Source: Silobreaker, 23 August 2011)
Standard Chartered Bank unveiled a set of customized services for               Sadharan Bima earns Tk 1.26b net profit
affluent young professionals to serve them with one-stop services more
                                                                                Sadharan Bima Corporation (SBC) earned a net profit of Tk 1.26 billion for
conveniently. The preferred banking product will offer a range of
                                                                                the year 2010. The net profit increased by 24% or Tk 240 million
differentiated services, including dedicated relationship manager,
                                                                                compared to the previous year. In the year 2010, the SBC earned a total
preferential queues, a platinum debit card with enhanced withdrawal and
                                                                                premium of Tk 5.75 billion and settled total claims amounted to Tk1.51
retail spending and a pre-approved credit card. A customer with a monthly
                                                                                billion. The corporation paid Tk 274 million as income tax and Tk 200
income of Tk 1 lakh or above will be entitled to get the services. Deposit
                                                                                million as dividend to the government.(Source: The Financial Express, 25
accountholders can also get the preferred services if they maintain an
                                                                                August 2011)
average balance of Tk 5 lakh in their accounts. (Source: The Daily Star,
08 August 2011)                                                                 New MD of Exim Bank
EXIM Bank chooses Ahnlab software                                               Renowned banker M Fariduddin Ahmed has joined Exim Bank as the
                                                                                Managing Director. Prior to his new assignment, he was the Head of
EXIM Bank has chosen Ahnlab V3, an anti-virus solution to ensure the
                                                                                Islamic Banking Division of AB Bank Ltd. Mr Ahmed started his banking
Centralized Online Security Solution for entire branches of the bank in
                                                                                career in Sonali Bank. He served in that Bank as Branch Manager,
Bangladesh. EXIM Bank said the anti-virus software produced by the
                                                                                Faculty Member of Staff College, Head of Electronic Data-processing
Ahnlab would be a great help for the bank to keep its system safe from
                                                                                Department and other departments of that Bank for several
the attack of malicious viruses. (Source: The Independent, 08 August
                                                                                years.(Source: The Financial Express, 26 August 2011)
                                                                                New MD of City Bank Capital
Prime Financial NAV declared
                                                                                Ershad Hossain has recently joined City Bank Capital Resources Limited
Prime Finance Asset Management Company Limited (PAMC) has
                                                                                (a wholly owned subsidiary of The City Bank Limited) as Managing
declared the Net Asset Values (NAV) of Prime Financial First Unit Fund,
                                                                                Director & CEO.Prior to joining City Bank Capital Resources Limited;
the first private sector unit fund in Bangladesh. The total NAV of Prime
                                                                                Ershad Hossain was the Investment Advisor in Equity Derivatives of Hong
Financial First Unit Fund stood at Tk 209,407,868 on the basis of cost
                                                                                Leong Bank, Singapore. (Source: The Independent, 25 August 2011)
price and Tk 203,919,739 on the basis of market price at the close of
business operation on 11 August, 2011.(Source: Hawker,13 August 2011)           New chairman of Prime Bank
Ansar-VDP bank to up loan target                                                Md Shirajul Islam Mollah has recently been elected chairman of the board
Ansar-VDP Unnayan Bank has ramped up its loan disbursement target by            of directors of Prime Bank Limited for the next term of two years effective
133 % to Tk 4.5 billion this fiscal. As members of Ansar are shareholders       from August 24, 2011 to August 23, 2013.This was disclosed at the 367th
of the bank, the bank gets no required capital from them, which forces it to    meeting of the board of directors of Prime Bank at its head office in the
incur losses every fiscal. The bank disburses collateral-free micro-loans       city recently.Mr Mollah, a sponsor director of the bank and renowned
up to Tk 200,000 among members of the ansar community. (Source: The             businessman, is the managing director of China-Bangla Ceramic
Financial Express, 13 August 2011)                                              Industries Ltd, Bajnabo Textile Mills Ltd, Bengal Tiger Cement Industries
                                                                                Ltd and United Shipping Lines Ltd.(Source: New Age, 27 August 2011)
NBP launches three new products in BD
                                                                                Rupali Insurance re-elects chairman
National Bank of Pakistan (NBP), Bangladesh Operation, recently
introduced three new products in Bangladesh.The products are: NBP               Mostafa Golam Quddus has recently been re-elected chairman of Rupali
Junior Savings Account (School Banking), NBP Deposit Premium Scheme             Insurance Company Ltd. The election took place at the 140th board
(DPS) and NBP Double Benefit Scheme.(Source: Priyo, 13 August 2011)             meeting of the insurer recently. Former president of Bangladesh
                                                                                Garments Manufacturers and Exporters Association, Quddus is the
EBL opens 50th branch at Chittagong EPZ
                                                                                chairman of Dragon Group. (Source: The Daily Star, 28 August 2011)
Eastern Bank Limited has opened its 50th branch at Chittagong EPZ.
Located at Saleh Complex of the port city, the CEPZ branch of the bank
has been equipped with modern banking facilities to provide customers a
wide range of services.(Source: The Financial Express, 16 August 2011)
Southeast Bank, GP launch mobile remittance service
Southeast Bank Limited and Grameenphone jointly launched a service for           Disclaimer
disbursement of foreign remittance to beneficiaries through the mobile
phone system. The services will allow faster transfer of money from the          This newsletter has been prepared by the Research and Development (R&D)
remitter to the beneficiary than all existing means of foreign remittance. It
                                                                                 Division of Prime Bank Limited (“PBL”) for the benefit and use of the reader.
will also bring more transparency to the remittance business because
once the money is delivered to the beneficiary; a SMS will be generated          The newsletter is a proprietary to PBL and readers are allowed to
automatically informing all concerned that the money has been safely
                                                                                 disseminate it in unabridged and original form and reference should be made
delivered. (Source: The Daily-Sun, 20 August 2011)
                                                                                 while quoting the newsletter.
AB Exchange (UK) Ltd launched
AB Bank has recently opened an exchange company, AB Exchange (UK)                In preparing this newsletter, we have relied upon and assumed, without
Limited in the UK.The simple inaugural ceremony was marked by the                independent verification, the accuracy and completeness of all information
presence of representatives from the Bangladesh High Commission and
the local community. The Chairman and the Managing Director of AB Bank           available from public sources or which was provided to us by or on behalf of the
introduced the Bank and its operations to the audience, other speakers           source of information cited in the newsletter. We do not accept any obligation
welcomed the establishment of AB Exchange (UK) Ltd and wished its
continued success.(Source: The Financial Express,23 August 2011)                 arising out of any decision made from the contents of this newsletter.

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